Recently in one of our major newspapers there was a headline that read: ‘House prices up $300,000 in areas leading Sydney rebound’. Just 12-months earlier another headline read: ‘Melbourne and Sydney house prices plunge further in January’.
My point is that residential property is a dynamic, and almost constantly changing market, and while the two headlines will have been supported by some hard facts, I suggest that no two markets are ever exactly the same, trends either up, down or sideways are never uniform. Local conditions will always vary and at times deliver some surprises.
Trends are to my thinking far more local with different factors across varied locations and then extending right down to individual properties. It is with this in mind that over the next few weeks I’m taking a look at current highlights across apartments markets in Sydney, Brisbane, Melbourne, Canberra and Newcastle.
To kick-off I’ve elected to go to Newcastle. However, an interesting, comment made to me by a major developer helps put Newcastle’s market highlights into some further perspective;
’Markets are always reasonably acknowledged as being very local, and yet headlines are often over simplistic and even in conflict, perhaps to generate a quick response.
‘We need to appreciate that one market might be at the front end of the cycle, while others are not. One market might have ample stock, while demand is improving. Others might have low stock, but also low buyer demand, no two markets are ever identical.’
And so, to Newcastle which is a city that I think delivers an entire range of local factors that help the cities apartment market exhibit some very exciting trends. It’s an impressive city that local tourism bodies describe as the kind of place you’ll visit and never want to leave and recently sitting at Newcastle’s historic Customs House hotel, observing the city I would be inclined to agree.
While Newcastle has a mature and growing apartment market there’s also the bigger picture that underwrites its appeal.
Newcastle enjoys a stunning coastal location, and its inner-city harbourfront is perhaps at the heart of the cities appeal. So much so that the City of Newcastle will soon commence a community engagement process to develop a masterplan for the Harbour Foreshore Precinct.
The precinct masterplan includes prime community spaces east from Merewether Street and includes the Harbourfront parkland and Joy Cummings Promenade stretching along Wharf Road, former rail sheds, and Foreshore Park’s amphitheatre and parkland near Nobbys Beach.
Some basic facts include its access via 2-hours from Sydney by road, and
you can fly to and from centres including Sydney, Melbourne, Brisbane, Canberra and regional centres like the Gold Coast, Ballina/Byron and Dubbo and there are inter-city trains to Sydney.
Newcastle is a really fantastic city to live in and there’s no need to look very far to find the evidence to back up this claim, the whole place also manages in creating a sense of community. The outdoors and a strong cultural life built around theatre, art galleries, and a vibrant night life adds to the appeal of its residential market.
Newcastle’s housing stock is diverse and includes the City Centre with its amazing harbour life – amazing beaches including Newcastle Beach, Merewether Beach, Nobbys Beach.
Beyond the CBD regional apartment market with its coastal city vibe, there are also varied suburban options that include, tree changers and many urban options connected across greater Newcastle.
An international ranking
Currently Australia does not figure in the Lonely Planet’s top 10 Cities guide, we do get a mention in the guides regional best 10 with Lord Howe Island in fifth place. However, nine years ago Newcastle was named as one of the 10 best cities to visit in the world by Lonely Planet.
A big and very welcome surprise at the time but given progress in the intervening period it was perhaps a positive sign of what was to come. Newcastle appears to have lived up to its surprise nomination.
Currently with $6.5 billion worth of infrastructure completed, planned or under way and nearly $2 billion plus in private development projects, Newcastle is going pretty well thank you.
Work on the $260 million light rail network is done and complete, while major residential projects, are underway throughout the city and along its very attractive and importantly accessible harbourfront.
Newcastle’s apartment boom to maturity
Population growth, low unemployment and a measurable disparity compared with Sydney prices has helped fuel significant residential development in Newcastle. This development has created a strong market that clearly helps bring added energy and life to the wider CBD and core City areas.
Apartment stock has increased markedly over recent years, with some 300 apartments released in 2018, increasing to 428 in 2019 and anticipated 478 in 2020. However, it is generally considered that Newcastle still has an undersupply of stock which, since 2017 has been reflected via the solid capital growth experienced in the CBD apartment market.
Newcastle Project Price Details
There are essentially three main submarkets within the Newcastle apartment market benefitting from a variety of different product types. They offer a vast value range, with the higher priced products typically being located close to Newcastle Beach or Newcastle Harbour (Honeysuckle Precinct) and benefiting from excellent view corridors attracting owner occupiers.
There is strong levels of demand from investors owing to the appeal of the near CBD location alongside Newcastle University, the regions strong Urban Renewal and nearby Law Courts.
Another market that has seen strong growth since the completion of the Newcastle Transport Interchange is Wickham, this precinct is more affordable then the harbour-front areas, however it still benefits from its proximity to major transport routes and to major CBD employment areas.
Given the markets diversity there’s a natural and a significant price disparity between each sub-market in Newcastle. The three main precincts easily demonstrate how prices vary and it is the varied price options that further underscore the appeal of Newcastle’s varied apartment markets.
Apartment prices vary across different sectors and locations, the starting point for centrally located, 1-bedroom apartments is around a very competitive $400,000. However, in prime locations 1-bedroom prices are, as would be expected, higher between $650,000 and $725,000.
We see much the same when it comes to 2 and 3-bedroom apartments with established 2-bedroom stock starting at an attractive $520,000 – $600,000 however for new prime 2-beds the range is $860,00 – $1.3 million.
Moving to 3 bedrooms, where demand is growing prices start at around $900,000 to $1.37 million, while for new prime CBD and harbourfront 3-bedrooms the process are a direct reflection of demand and range between $1.5 – $1.9 million at the top-end of new prime stock.
It’s worth understanding that like all markets, as Newcastle’s apartment inventory changes and expands there’s a natural evolution in terms of prices, quality and demand. The markets dynamics are also shifting alongside the buyer demographic profile.
One example, as the above prices reflect, is the strong demand for new stock on the city’s waterfront where supply is now becoming limited, and one result is more complex (layered) prices that prime harbour-front sites and apartments exhibit and are now much more limited.
It’s Time for Fast Train Service
The former prime minister Paul Keating recently called for a fast train between Sydney and Newcastle.
Mr Keating said the government should take advantage of current low interest rates to invest in very large infrastructure projects like a fast train between Newcastle and Sydney, an idea that he suggested would deliver substantial economic and social benefits to the Hunter Region.
This is not a new idea as such a high-speed rail link has been talked about for decades, and often during elections. According to Paul Keating, and he is not alone in his views, a fast train would turn Newcastle into a satellite suburb of Sydney. A suggested flow-on would help take house-price pressures off the Sydney property market and give a boost to Newcastle’s market and further open up the entire Hunter Valley region.
A Final Word or Two
It’s human nature that there can be lots of pre-conceptions about a particular place however when thinking of Newcastle, the time to put aside any such thoughts has well and truly past.
Newcastle offers an environment that appears to be well on the way to creatively responding to the way people want to live and work, from its easily accessible beach-side location to its down-to-earth response to community and culture, all of which reflect in Newcastle’s strong regional apartment market. Clearly then, Australia’s seventh largest city is still doing pretty well – thank you.